Unofficial Earnings Play Follow-Up

Unofficial Earnings Play Follow-Up

Hello Smart Option Sellers! Nektar Therapeutics (NKTR) Yesterday we put out an unofficial earnings play on NKTR, hoping to capitalize on a larger-than-expected move from this biotech company. The stock finished yesterday at $19.64 per share. I didn't hear from many of you so I don't know what prices and/or which strikes were ultimately attained. Earnings were mostly received positively by the market as the stock is right back at the $20 level as I type. As mentioned in yesterday's write-up, the worst case scenario for these types of plays is if the stock goes completely nowhere after the announcement. As of now, NKTR is higher by about $.35 per share, not enough to really produce any gains for either the call option or the put option. The $18 put option & the $22 call option combo cost about $.60 per contract yesterday, a bit more than I recommended paying. The $18 put/$23 call combo was about $.45 total, so maybe some of you did that trade. As of now, both of those combinations are worth roughly $.35 & $.25 respectively. Not a complete washout, but slightly underwater at the moment. Since the trade doesn't expire until next Friday August 18th, you can opt to hold to see if the stock will trend to one side or the other by that time. If you do hold, you must exit by then. Or, you can opt to sell out of both options to salvage any value at any time between now and then. Since there is not much time left, both of the options will lose value quickly each day, assuming the stock doesn't go anywhere. Macy's (M) I was debating whether to offer this unofficial earnings play up as well, and considering the carnage in the brick & mortal retail sector of the last year, it seems it could be a worthy choice. Macy's stock has certainly taken it on the chin, losing roughly 70% of its value since the summer of 2015. It has gone from a high of $73 per share, to its current value of $23.50. It's been a rough ride for department stores such as Macy's. Dillards (DDS) & Kohls (KSS) have suffered the same fate. All due to my friend and yours - Amazon! Macy's reports earnings before the opening bell tomorrow and it could move the stock a decent amount. Over the past year, each earnings announcement for Macy's has brought about a gap move of at least $5 per share, both to the upside and downside. Which way it will go tomorrow is anyone's guess. But in order to profit from these types of trades, you need to buy options (both calls & puts) within that $5 radius of the potential stock move. As of now, you can buy cheap options ($.20 or less) within a $3 to $3.50 radius around the current stock price by using the options that expire in two days from now on Friday August 11th. If you feel that Macy's can make this kind of move and want to take a stab, here's what you can choose to do: Look to buy both the Macy's August 11, 2017 $23.50 put option and the $26.50 call option or $27 call option for a total price of not much more than $.40 total ($.20 for each option). In order to profit on this combo, Macy's stock needs to move below $18 or above $22 or $23 (depending on which call option you buy). Remember the guidelines: There are two ways you can execute these trades: 1. You can outright buy each option separately as two individual transactions. Try not to pay much more than $.20 for each (total of $.40). 2. You can buy them as a "strangle". This is a spread type of trade where you will buy both the call option and the put option in a single transaction and pay one price for both ($.40 if you can). Ask your broker for help with the strangle trade if you are unfamiliar. Typically, executing a strangle is the preferred method as it allows you to buy both simultaneously which can keep you from being whipsawed around if you were to buy each one separately. This trade is good for today only. Do not enter these trades tomorrow. And remember the rules: 1. These are "unofficial" trades, so you can't hold me to it! 2. Buying options is a low probability trade, so there will be many more losses than wins. This is why you only want to buy the really cheapie options. 3. These are one-day trades. You will know very quickly whether it will be profitable or not. 4. Don't go hog wild. These are "fun" trades, but don't bet the house. 5. Use the August 11, 2017 expiration contracts that expire in 2 days. The worst case scenario for these types of trades is if the stock goes completely nowhere after the announcement. That's the death knell for trades like this. All option values will just evaporate and become worthless. So, keep that in mind if you don't think Macy's is capable of the kind of move we need. Get those orders in if you choose to do so. Remember, you are buying these trades, and they are optional and unofficial. I will send an alert tomorrow morning on follow-up action. Warren Buffett Report I'll keep this notice going in the next few alerts just so everyone has a chance to see it and remember it. If you need the link again, click here to read about it. That's all for now. Continue to work all other trades as instructed and continue to hold all other open positions as-is. See the Current Portfolio below for current prices & instructions. Quick note on the Current Portfolio - if you are a new subscriber and don't have a position yet on any of our trades, make sure you enter your order at the original recommended sell prices. Do not enter any order at current prices unless it's higher than the official recommendation. If you are unsure or have any questions, please ask us! You can always contact us here Regards, Lee Let's Grab That Cash!

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